Question

Ankur and Vikram were partners sharing Profits & Losses in the ratio 3 : 2. They decided to share future Profits & Losses equally. On the date of reconstitution there was Investment Fluctuation Reserve of ₹ 4,00,000 in the books of accounts. Pass entries in the following cases

1. Value of Investment reduced by ₹ 2,50,000.
2. Value of Investment increased by ₹ 5,00,000.
3. There was no change in value of investments.

Answer 1

Journal entries
Date	Particulars	L. F.	Debit (₹)	Credit (₹)
A.	Investment Fluctuation Reserve A/c    ...Dr.		4,00,000	-
	To Investment A/c		-	2,50,000
	To Ankur’s Capital A/c		-	90,000
	To Vikram’s Capital A/c		-	60,000
	(Being decline in the value of Investment credited to Investment A/c and remaining reserve credited to old partners.)
B.	Investment Fluctuation Reserve A/c    ...Dr.		4,00,000	-
	To Ankur’s Capital A/c		-	2,40,000
	To Vikram’s Capital A/c		-	1,60,000
	(Being reserve credited to old partners.)
	Investment A/c    ...Dr.		5,00,000	-
	To Revaluation A/c		-	5,00,000
	(Being investment value increased)
	Revaluation A/c    ...Dr.		5,00,000	-
	To Ankur’s Capital A/c		-	3,00,000
	To Vikram’s Capital A/c		-	2,00,000
	(Being profit on revaluation distributed among partners)
C.	Investment Fluctuation Reserve A/c    ...Dr.		4,00,000	-
	To Ankur’s Capital A/c		-	2,40,000
	To Vikram’s Capital A/c		-	1,60,000
	(Being reserve credited to old partners.)